The initial public offering of Tata Group’s flagship financial services arm, Tata Capital, specialising in diverse financial services for retail, SME, and corporate clients, offering products such as home and personal loans, business and education loans, and wealth management services, is in focus as the IPO’s GMP is less than 2 percent.
Despite the IPO receiving bullish reviews from as many as 15 brokerages, the GMP has still slipped. Most analysts have praised the company’s strong fundamentals, diversified business, and trusted parentage.
Brokerages such as Canara Bank Securities, Anand Rathi, BP Wealth, and Mehta Equities have all called it a quality long-term play. They highlight Tata Capital’s strong retail and SME franchise, healthy asset quality, and focus on digital lending as key factors making it a major beneficiary of India’s growing credit demand.
Here is the reason for the low GMP
Fair Pricing Limits Listing Gains
The expert has noted that the grey market premium remains low because the IPO is fairly priced. With a post-market valuation of 4.2–4.3 times book value, there is limited scope for significant listing gains.
Although the company has strong fundamentals, the cautious market sentiment and valuation pressures on growth companies have kept the GMP subdued despite the solid business model.
Risks From the Recent Merger
The experts noted that Tata Capital’s recent merger with Tata Motor Finance Ltd. (TMFL) has temporarily affected its financial health. While the merger expands its vehicle finance presence, it also increased gross NPAs from 0.5 percent to 1 percent and reduced return on equity (ROE) from 14.2percent to 12.6 percent, raising short-term concerns about asset quality and profitability.
Tata Capital’s provision-coverage ratio (PCR) fell sharply to 58.5 percent in FY25 from 77.1 percent in FY23, owing to the TMFL merger. They also cited the PCR trend, ranging from 53.9 to 77.1 percent across FY23-FY25, as a key risk, adding that inadequate provisioning could adversely affect financial stability.
Crowded IPO market and stretched liquidity
The current IPO market is flooded with back-to-back large offerings, including big names like LG Electronics, leading to stretched investor liquidity. This crowding has reduced speculative interest in the grey market.
Experts highlight that in such conditions, investors are becoming more selective, diverting attention and funds to other high-growth IPOs, which is affecting Tata Capital’s grey market premium.
Financials & Others
The company has demonstrated steady financial performance over the past three years. The company’s total income was Rs. 13,637.49 crore in March FY23, which increased to Rs. 18,198.38 crore in March FY24, and further rose to Rs. 28,369.87 crore in March FY25 and stood at Rs. 7,691.65 as of June 2025.
Profit After Tax (PAT) grew from Rs. 2,945.77 crore in March FY23 to Rs. 3,326.96 crore in March FY24, and then to Rs. 3,655.02 crore in March FY25, and stood at Rs. 1,040.93 June 2025.
Tata Capital Limited (TCL), a subsidiary of Tata Sons, is a leading non-banking financial company (NBFC) in India, offering a wide range of financial services to retail, corporate, and institutional clients. Its key offerings include consumer loans, commercial finance, wealth management, investment banking, private equity, and cleantech finance.
As of March 31, 2025, TCL provides over 25 lending products tailored to salaried individuals, entrepreneurs, SMEs, and corporates. By June 30, 2025, it had established a strong nationwide presence with 1,516 branches across 1,109 locations in 27 states and union territories.
Tata Capital IPO Ltd has launched its Initial Public Offering (IPO) to meet the Company’s future capital requirements. The IPO comprises a fresh issue of 21.00 crore shares aggregating to Rs. 6,846.00 crores and an offer for sale of 26.58 crore shares aggregating to Rs. 8,665.87 crores with a face value of Rs. 10 each.
The IPO opened for subscription on October 06, 2025, and closes on October 08, 2025, with the price band set at Rs. 310-326 per equity share. Tata Capital Ltd IPO will list on BSE and NSE, with a tentative listing date fixed as October 13, 2025.
The main objective of the IPO is to use the net proceeds primarily to strengthen the company’s Tier-I capital base, ensuring sufficient funds to meet future capital needs, including for onward lending.
Written by Sridhar J
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